Zach is planning to invest up to $50,000 in corporate and municipal bonds. The lest he will invest in corporate bonds is $6000 and he does not want to invest more than $27,000 in corporate bonds. He also does not want to invest more than $34,650 in municipal bonds. The interest is 8.5% on corporate bonds and 6.8% on municipal bonds. This is simple interest for one year. What is the maximum income?

Question

Zach is planning to invest up to $50,000 in corporate and municipal bonds. The lest he will invest in corporate bonds is $6000 and he does not want to invest more than $27,000 in corporate bonds. He also does not want to invest more than $34,650 in municipal bonds. The interest is 8.5% on corporate bonds and 6.8% on municipal bonds. This is simple interest for one year. What is the maximum income?

Answer 1

He is investing both amounts for the same amount of time, and both at simple interest rates. The only differentiating factor here is the interest rate, so it would make sense for him to invest as much as possible in corporate bonds, because they earn the higher rate of interest. This should be enough to work out your answer.

Answer 2

To find the maximum income that Zach can earn from his investments, we need to determine the maximum amount he can invest in each type of bond and calculate the income from each.

First, let's determine the maximum amount Zach can invest in corporate bonds. According to the given information, the least he will invest in corporate bonds is $6,000, and he does not want to invest more than $27,000. Therefore, the maximum amount he can invest in corporate bonds is $27,000.

Next, let's determine the maximum amount Zach can invest in municipal bonds. The maximum investment in municipal bonds is given as $34,650.

Now, let's calculate the income from each type of bond. The interest rate for corporate bonds is 8.5% and for municipal bonds is 6.8%. Since it is simple interest for one year, the income is calculated by multiplying the investment amount by the interest rate.

For corporate bonds:
Income from corporate bonds = Maximum investment in corporate bonds x Interest rate for corporate bonds
= $27,000 x 8.5% = $2,295

For municipal bonds:
Income from municipal bonds = Maximum investment in municipal bonds x Interest rate for municipal bonds
= $34,650 x 6.8% = $2,357.20

To find the maximum income, we add the income from both types of bonds:
Maximum income = Income from corporate bonds + Income from municipal bonds
= $2,295 + $2,357.20 = $4,652.20

Therefore, the maximum income that Zach can earn from his investments is $4,652.20.